Ladies and gentlemen, good day and welcome to JK Tyre & Industries Limited Earnings Conference Call, hosted by Emkay Global Financial Solutions Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Mr. Chirag Jain, Deputy Head of Research, Emkay Global Financial Services Limited. Thank you, and over to you.
Thank you, [Samarth] Good afternoon, everyone. On behalf of Emkay Global , I would like to welcome you all to the Q2 FY 2026 Earnings Conference Call of JK Tyre & Industries Limited. Today, we have with us the senior management team, represented by Mr. Anshuman Singhania, Managing Director, Mr. Arun K. Bajoria, Director and President International, Mr. Sanjeev Aggarwal, Chief Financial Officer, and Mr. A.K. Kindra, Financial Advisor. We'll begin the call with opening comments from the management team, followed by the Q&A session. Over to you, sir.
Yeah. T hank you, Chiragji . Good evening to everyone. I welcome you all to JK Tyre Q2 FY 2026 Earnings Call. I'm glad to be here, and I have with me, Dr. Arun K. Bajoria, Director, President International, Mr. A.K. Kindra, Financial Advisor, and Mr. Sanjeev Aggarwal, the CFO. At the outset, I would like to extend my heartiest greetings on the Dipawali and the festive seasons to all of you. To begin, the Indian economy maintains its position as the world's fastest-growing economy, as it continues to demonstrate encouraging signs of growth, led by resilient service exports, softer crude oil prices, GST reforms, and improving trade balances.
GDP in Q1 FY 2026 grew by an impressive 7.8%, as against 7.6% in Q4 FY 2025. W ith an outlook of 6.8% for the entire year of 2026, reflecting a resilience of the Indian economy, even as it faced external pressures from U.S. tariffs and stress on trade globally. Keeping in view the above, India's long-term growth prospects appear to be strong on the back of robust macroeconomic fundamentals, buoyant domestic demand, and rising infrastructure development, which are [crosstalk] further strengthening the India's position at the global footprint. The government, in order to boost consumption, has reduced the GST on tires from 28% to 18% and on farm tires from 18% to 5%. This GST deduction will act as a catalyst for growth across the sectors, and is expected to improve the overall auto demand by 8%- 9%.
JK Tyr has passed on a 100% benefit of GST reduction to its customers. GST reduction lowers the total cost of ownership for the end consumers, which will lead to faster replacement of commercial vehicles, on account of an increase in consumption across sectors like SMCG, consumer durables, e-commerce, and core sectors, which will have a positive impact on tire demand. We are already witnessing a favorable tailwind in terms of festive demand, and overall improved customer sentiment. Auto sales have witnessed a robust volume growth of 10% in Q2. Segment-wise, commercial category grew by approximately 9%, [two-wheeler] grew by 11%, and farm by 28%. Although the passenger vehicle category witnessed a modest growth of 2%, it has now started achieving strong numbers recently. Going ahead, commercial vehicle and passenger car segments are expected to grow in the mid-single-digit.
Farm equipment and two, three-wheeler categories are set to grow at a high single digit. This growth is led by steady replacement demand and healthy rural income. The EV market is soaring along with IC vehicles, with two-wheeler and passenger cars taking the lead. This encouraging growth highlights an accelerated adoption of electric mobility in India, supported by new model launches, government incentives, and increasing consumer awareness of sustainable transportation solutions. Export vehicles greatly contributed to the auto sector. In Q2 FY 2026, exports registered a double-digit growth of more than 20% and outpaced the domestic growth on a Q-on-Q basis. The tire industry has been performing well, and it is continuously gaining strength on a Q-on-Q basis. I'm happy to share that JK Tyre has registered its highest ever consolidated revenue of INR 4,026 crores, up by 10% on a Y-on-Y basis.
Consolidated EBITDA for the quarter stood at INR 536 crores, with an improved margin of 13.3%. Improved operational performance is a result of higher sales volumes, along with softening raw material prices, apart from higher operational efficiencies. I am delighted to share that US Royale passenger car tires have been chosen for an exclusive fitment in the newly launched Hyundai Creta Knight Edition, which is a testimony of our being the most trusted mobility partner of choice with OEMs. We are amongst the few companies in India to launch an AI-powered voice bot that uses natural language processing for superior customer interaction and support. At JK Tyre, digital transformation continues to be a strategic priority, and as a part of our resolve to secure an organizational digital future.
We are proud to share that JK Tyre has once again secured the top-notch chair edge ESG One Plus rating, setting another benchmark in the domain of sustainability. The above ESG rating demonstrates the JK Tyre leadership position, achieved through proactive efforts across key environmental, social, and governance themes, underpinned by comprehensive policies, advanced monitoring systems, and significant investment in renewable energy and decarbonization technologies. Another noticeable achievement reflecting our commitment towards the environment at JK Tyre, is that we have become the number one company car manufacturer to publish the Environmental Product Declaration, EPD on the International EPD system platform for the three products in the PCR and TBR categories, enabling customers to make more informed choices and showcasing our commitment towards sustainability.
With the combination of growing consumer demand, and technological advancement and trust in innovation, JK Tyre is uniquely positioned for significant growth in the coming years, while expanding its presence across domestic and international markets. Now, I would like to take you through some of the key operational highlights. We registered the highest ever turnover at the consolidated level, with quarterly revenue at INR 4,026 crores, up by 10% on a Y-on-Y basis. The domestic market registered a growth of 15% in volume, driven by a noticeable uptick across the segment. Export volume grew by 13% over the previous quarter, despite the uncertainty around the U.S. tariff rates. TBR volumes in numbers in the replacement market grew by 22% on a year-on-year basis. Passenger line volumes grew by 16% in the replacement market, and also export volume registered a 6% growth on a Y-on-Y basis.
Farm category volume also saw a robust growth in OEM, a growth of 78%, and in replacement, a 12% growth on a Y-on-Y basis. Two, three-wheeler category volume in the OE segment grew by 155% on a Y-on-Y basis. On a quarter-on-quarter basis, raw material prices corrected by 3%. Now, I would like Bajoriaj i to take us through the performance of Tornel .
Thank you, [Amritsar]. The Mexican economy continued to demonstrate resilience despite the uncertainties around U.S. tariffs. Notably, Mexico has surpassed China and Taiwan as the largest exporter to the U.S.A. during the first half of 2025. The World Bank has raised the GDP growth forecast of Mexico to 0.5% for 2025, as compared to 0.2% earlier. T he projection for 2026 GDP growth stands at 1.4%, which highlights the improved confidence in the Mexican economy. The Bank of Mexico has further cut the benchmark interest policy rate to 7.75% in this quarter, which will improve consumer sentiment for overall economic growth. I would like to highlight that in quarter two, JK Tornel has achieved the highest ever sales compared to the last six quarters. Domestic PCR and TBR sales hit their record highs in this quarter, and we are focusing to further increase these numbers in the coming quarters.
Higher sales were achieved through better market coverage, increase in sales to mass merchandisers, and a focused sales approach in Brazil and Latin America markets. Exports to the U.S.A. remained steady, despite uncertainties of the U.S.A. tariffs. Sales have bounced back to INR 639 crores, against INR 505 crores in the previous quarter. A jump of 26%, thereby reflecting our relentless focus and concerted efforts to increase the top line. JK Tornel 's EBITDA for Q2 grew nearly five-fold, reaching INR 49 crores as compared to INR 10 crores in the previous quarter. EBITDA margins rebounded to previous levels and stood at 7.6%, reflecting an expansion of 560 basis points sequentially. Further, PBT and PAT stood at INR 25 crores and INR 15 crores, both up significantly over the last quarter.
Further, the United States-Mexico-Canada Agreement, USMCA is due for revision in 2026 and we are watchful for the same, as it remains highly crucial to maintain trade relations and diplomatic ties with the U.S.A. Now, I would request Mr. Sanjeev Aggarwalj i to talk about the financial performance of JK Tyre f or the second quarter of financial year 2026. Thank you.
Thank you, sir. Thank you very much. I would like to brief you all about the key highlights for quarter two of financial year 2026. The first one is consolidated revenues of Q2 FY 2026 were recorded at the highest ever level in a quarter, at INR 4,026 crores, which is up by 10% on a Y-on-Y basis, as against INR 3,643 crores in the corresponding quarter. Consolidated EBITDA for Q2 was recorded at INR 536 crores, as compared to INR 443 crores in Q2 FY 2025, which is an increase of 21% on a Y-on-Y basis. EBITDA improved by 26% over the previous quarter. EBITDA margins during the quarter were recorded at 13.3% versus 10.9% in Q1, representing an improvement of 240 basis points over the previous quarter.
Cash profits for the quarter stood at INR 428 crores, which is up by 38% on a Q-on-Q basis and 33% on a Y-on-Y basis. Profit after tax for the quarter stood at INR 223 crores, which is up by 54% on a year-on-year basis. Capacity utilization for the quarter was 88% on a consolidated basis. Radial capacity utilization continues to remain above 90%. Exports in Q2 grew by 10% value [crosstalk] sequentially, despite the tariff-related challenges. Both the subsidiaries, [Cavendish Industries Ltd] and Tornel Mexico, witnessed robust performance in this quarter, and added significantly to the overall financials of the company. Consolidated EPS in Q2 improved to INR 8.08 as against INR 6.03 per share in Q1. The return ratios have been improving continuously. ROCs and ROEs have remained robust in Q2.
Net debt, as on the 30th of September stood at INR 4,201 crores as compared to INR 3,862 crores as on the 30th of June 2025, which is up by INR 339 crores, which is mainly on account of increasing working capital requirement for carrying higher inventory of finished goods. On the other hand, gross debt increased by INR 243 crores. This is mainly, the funds which were available to the company have been utilized for the purpose of the projects implementation, which are underway. The balance sheet of the company continues to remain healthy, and as I said earlier, the robust key financial ratios, leverage ratios, net debt to equity at the level of 0.75, and net debt to EBITDA at 0.25 multiple, as on the 30th of September.
Regarding the merger [one] update, we are just nearing the final hearing date, which is scheduled for tomorrow. T his is the final hearing with the NCLT Jaipur, and we are expecting the merger to be completed in all respects in terms of the effectiveness by the end of November 2025, which will bring us a lot of synergy in terms of the merged entity and we will keep you informed about the benefits which we are gaining out of this merged entity. Thank you so much. We now open the forum for questions. Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Basudeb Banerjee from CLSA. Please go ahead.
Yeah, thanks. Congrats for a good set of numbers. Just a few questions, sir. One, the first question for Sanjeevji . Sir, from the cash flow statement, almost INR 610 crore of CapEx in the first half, and as you said, working capital increased this quarter. T hat's how one can see gross debt more or less to have remained unchanged. What is the outlook for full-year CapEx, and how do you see the working capital normalization in the coming quarters, so that one can see a good FCF generation in the second half?
Yes, thank you. This is regarding the total cash available, what we have incurred so far in the first half, which is about INR 610 crores, and almost the equal number, which is about INR 600 crores roughly, is going to be spent in the second half as we receive machines for the projects which are under implementation. INR 1,200 crores of the total CapEx outflow is scheduled for this year, and this includes of course some amount towards the normal maintenance CapEx as well.
As far as the working capital is concerned, this was an intentional addition to the finished goods because we wanted to be ready for the festive season. There was an addition of some finished goods for the preparedness towards the festive season, but I think now this working capital overall reduction would be there. W e are hoping that with this reduction, working capital will come back to the normal level.
Sir, can you give some breakup of the growth CapEx, which segments you are investing in using this INR 1,200 crore?
Yes. A s you're aware, w e have been implementing at the moment, three projects. One is for the passenger car radial, which is for INR 1,025 crores at our Banmore unit, which is near Gwalior. The second expansion, which is going on, is for Luxor Tire Plant, and this is for TBR tires, and this is INR 261 crore. The third one is INR 112 crores for the light truck radial tires, all-steel light truck radial tires, which is going on at Big Tran tyre plant. These three projects put together will come up for production in quarter three, and the ramp-up will slowly happen to the highest level of 9,200 over the next six- months period.
Sure. Overall utilization as of now would be what, close to 85%?
This is more than 90% for the radial category where we are expanding, and this is going on very well in there.
Sure. The second question is, as you mentioned, [raw material] basket was down 3% Q-on-Q, and one can see that natural rubber prices are down to some INR 185 a kg from INR 205 sometime in August. How do you see in the December-March quarter, other than the crude price correction which is pushing up the margin now, the natural rubber price correction should aid the margin improvement further? Any comments on that?
Yes.
Yes. We see that the raw material price is going to be range-bound in the coming quarters, and definitely, it will help us in the margin expansion.
Sure. Last question, has there been in any segment replacement, market price cut to pass on the raw material reduction in the last quarter?
No, there has been no price revision.
Okay, sir. Thanks. That's all from me. Thank you.
Thank you.
Thank you. The next question is from the line of Rehan Saiyyed from Trinetra Asset Managers. Please go ahead.
[crosstalk] Hello. Am I audible?
Yes.
Hello.
Yes.
Good afternoon, [and thank you] for giving me the opportunity. I have only one question. I want to understand regarding the export side. Your export grew 13% quarter- on- quarter despite the U.S. tariffs and uncertainty. I want to understand, what is your plan B in case tariffs trend worsen in the current year 2026, and are you reallocating volumes to alternate geographies or increasing product mix of higher margin SKUs to offset any impact? What was the management view on this? Could you please explain?
Yeah. You see the export at large grew. Here, our export to the highest tariff country, which is the U.S.A, we have a total 3% exposure from the total revenue to the U.S. that we have successfully diverted to other countries where we are already participating. Namely, Mexico, Latin America, Brazil, we have been able to sort of divert, and our strong markets being the Middle East and even Southeast Asia, which we are exporting. We are also exploring new markets like, EU and U.K. and even Africa. That will be our continuous focus on those lines.
Okay. Do you think it will compress up our margin in any [crosstalk]?
No, it will not impact our margins. If at all, it will improve our margins.
Okay. [crosstalk].
Just to clarify, because we have already diverted a lot of our exports, which were going earlier to U.S. markets, once this agreement is in place between India and the U.S., there will be additional opportunity for us to export to that market.
Okay, f air enough. The last one [is a second question] I want to ask. Could you please give any guidance of the margin that we can then sustain over the next two to three quarters?
[crosstalk]. You're talking about the margin. Margin is also going to be in the range of 13%- 15%, which we will be able to achieve.
Okay. [That's good to know, sir]. Thank you, and good luck for the coming quarter.
Thank you.
Thank you.
Thank you. The next question is from the line of Abhishek Kumar Jain from AlphaGrep . Please go ahead.
Thanks for the opportunity, and congrats for a strong sense of performance. My first question on the Mexico business. What was the average [crosstalk] in terms of the rupee versus Mexican peso in this quarter? Now that the rupee versus Mexican peso has moved at around 4.8 per INR in the last two to three months, which is very much positive for your company, I just wanted to understand what benefit you would get because of this currency movement.
Here, in terms of rupees, our revenue growth has been 26% on a quarter-on-quarter basis. In terms of our constant currency to the Mexican peso, it has been 20% on a quarter-on-quarter basis. We have seen that the depreciation of rupee to Mexican peso has been 7% on a quarter-on-quarter basis.
Okay, what was the realization there?
Sorry, the a verage realization?
Average realization. [crosstalk] versus Mexican peso?
No average realization because there are a number of SKUs, a number of products, so this is not possible. It has definitely gone up, and we have taken the benefit of depreciation of rupee. Going forward also, if this continues, then I think we will gain it further.
Okay. How is the demand scenario there in domestic and exports from both?
Yeah, it's very good. It's improving further. You see, we are expecting that the Mexican exports to the U.S.A should be better, because they are now going to conclude a deal. As I had mentioned in my opening, this U.S.-Mexico and Canada agreement, w e are hoping that going forward, we will be able to maintain and improve our sales as well as our margins.
Adding to that, our push within Mexico and Brazil and Latin, which we are exporting from Mexico, we are expanding in terms of our white spaces and our channel partners as well. We see a good opportunity in terms of higher demand coming in from these countries.
Okay. What sort of value can we see in the Mexican business in the coming quarters? We have seen very good growth in this quarter, an 8% Y-on-Y growth [crosstalk]. If you see the past numbers, we were doing around INR 700 crores kind of revenue from Mexico in the quarter one and a half years back. Can we be able to achieve that number, sir?
We see a continuous growth because we are, as I told you, in the majority segment. W e are finding newer market opportunities to expand our dealer base, and find white spaces in Mexico and exporting countries from Mexico. We are also enlarging our offerings of development of newer products. We see a good growth coming in and a healthy growth for the year also coming in.
Okay. My next question is on the domestic side. We have seen very strong growth in the replacement business that has gone up by around 28% Y-on-Y in this quarter. Basically, TBR replacement demand was very much strong. What are the [winds to digital] in the TBR replacement segment, sir, and how will this sustain it?
We have seen a comeback of OE as well in the CV segment, which was muted. We see that, and we understand that in the replacement market right now, the inventories which the dealers were carrying in terms of tires, that has been flushed out. Thanks to GST, it has brought a lot of demand surge there. We see with the better monsoon, and we see with the better infrastructure put by the government and clubbed with the rural demand coming in, we see a very positive trajectory of demand. That all augurs well in terms of our demand for our truck [crosstalk] tires. Going forward, we see, overall all categories should do well in the replacement as well.
In the overall TBR business, how much contribution of LCVs in your segment, sir?
[crosstalk] you said about the LCV?
Yeah .
[crosstalk] Our CV segment contributes almost around 60% of it.
60%, okay. Yeah, how much contribution of the LCV in overall revenue?
Overall, the 60% is the commercial vehicle as we suspect. Out of which LCV, then of course MSCV, there are various segments which are there. We don't have the ready number at the moment, but we can provide the survey.
How is the make in the TBR versus TBB ?
[crosstalk] LCV non-truck, which also contributes, high [crosstalk] also, it will contribute somewhere around 12%- 13% in our mix.
Okay. Thanks, sir. How is the mix TBR versus TBB?
TBR is almost around 42%- 45%, and TBB would be around in the range of about 10%-1 3%.
Thank you, sir. That's all from me, sir.
Thank you.
Thank you. The next question is from the line of [Aditya Arkani] from Shah Capital. Please go ahead.
Thanks, [Jim] for the opportunity. Two questions from my side. I wanted to understand [BUN] category mix of India operation for Q2 FY 2026.
Could you repeat the question, please?
I wanted to understand [BUN] category mix of Q2 FY 2026 of India operation.
The category mix here.
The category mix here would be in terms of [crosstalk].
[crosstalk] category segment, right?
In terms of value, 5 7% would be in the truck space. Around 30% would be passenger line radial, and about non-truck bias would be about 10%. This is the mix.
Okay. BU mix?
Sorry?
BU mix, market mix, replacement, OEM, and Mexico.
Yeah, so replacement is 60%. OE is about 30%, and our export would be about 14%.
60, 30, and 14?
60%, 26%, 27% OEM, and 14% export.
Okay. The standalone number shows a drop of INR 173 crore versus quarter one, while India revenue has moved up by INR 63 crore in the same period. Can you throw some light on Cavendish 's performance?
No. O verall, you are talking about between the two entities you are saying or in the operations overall?
If I compare Q2 versus Q1, standalone number has dropped to INR 173 CR, while I see segmental performance in the consolidated segment.
There is no specific reason between the two quarters for some reason. Let's say if the demand for the product from the OEM for JK Tyre is higher, or it could be, let's say, in some quarters, it could be higher for the CL tyres. In order to remove this kind of confusion, this entity will get sourced, let's say, by the next quarter, and there will be only one, let's say, one company to catch up on. This just depends upon the OEM requirements to be caught up to [crosstalk] company. For us, it is the same. That is why I'm saying that India operations versus JK Tyre and CL, you are asking for India operations. For us, it is one and the same thing, India operations.
Okay. Thank you.
Thank you. The next question is from the line of [Grace Jain] from NAFA Asset Managers. Please go ahead.
Yes. Thank you for the opportunity and congratulations on a good quarter. My question is regarding JK Tornel. I wanted to understand, what is the capacity right now and what is the capacity utilization as well?
The capacity is around 59 million tyres, and the utilization overall, including the radial and the bias would be in the range of about 80%. The radial utilization is higher, at nearly 88% in JK Tornel Mexico.
Okay. In the next round of CapEx, how much will this capacity increase by?
It will increase by around 15%.
Okay. This is also passenger car radial, right, sir?
Passenger radial, correct, sir.
Okay. This will be online by December, this is what [is] , yeah?
No, it will be online from April 2026.
Okay. Thank you.
Quarter four.
2026.
Yeah, 2026. Quarter four 20 26.
Okay.
Thank you. The next question is from the line of [Puneet Zaveri] from Zaveri & Companies. Please go ahead.
Yes, sir. Thanks so much for the opportunity. I just wanted to understand , because of GST rate cuts, what has been the market share gains for you in any of the segments, especially regarding OEs in OEMs? Have you seen an increase in market share, especially for passenger car? Could you give us some perspective?
Yeah, sure. GST [has definitely brought] in a lot of cheers to our tyre segment. Particularly, JK Tyre has really gained, and our share of business in the OEMs, particularly in the CV, is the highest. There we have seen, and we are seeing a good pull from the vehicle manufacturer. We are also seeing good traction coming in from the replacement as well. We see this segment do well in the coming quarters. We are out of the monsoon as well, and there's a lot of infrastructure push and rural demand coming in our way. In the passenger car as well, there has been good traction in the entry-level vehicle, where we are also participating. That has seen the numbers also overall in the [PLT] go up. Also, we see that there is good demand which is coming in for the passenger as well in the replacement market.
It argues well in both the CV and passenger car. Plus, we are seeing the farm segment also coming in. There also, we are likely to get good traction. In the passenger as well, we have seen a good mix, which we are very much focusing in terms of higher rim sizes, and that is 16-inch and above. That is the premiumization. There also, we have seen a good mixed traction coming in from both OE and replacement.
Is there any kind of quantification that you can give for the market share gain in these segments? Anything on passenger cars as well as CVs that you can provide right now?
We don't really quote any market share, but definitely, our volumes have grown, and we definitely have gained markets.
Just to give you an idea, in the replacement market, Anshumanji mentioned earlier that in TBR, we have grown in the last quarter by 22% and in passenger car by 16%. I think this is more than the market growth rate, so y ou can imagine that our market share has really gone up.
Just one clarification. You mentioned about the capacity of JK Tornel . Could you repeat the number, please? I missed that number.
The capacity I had mentioned was 59 lakh tres.
All right. Thanks so much both for answering the questions and all the best.
[crosstalk]
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on the touch-tone telephone. The next question is from the line of Mitul Shah from DAM Capital. Please go ahead.
Yes. Thank you for the opportunity, and congratulations for a really great sequential improvement on top line as well as margin. Sir, one clarification that is for presentation. If I do the OEM calculation, it has showing double-digit decline, whereas last Q2 OEM production seemed to be quite strong. A nything I'm missing out, or is it because of the Tornel replacement increasing? How should one read about this?
In this segment, Mitul, what are you saying?
OEM.
OEM segment, if I do the [PPD] calculation of your [crosstalk].
[crosstalk] I think in numbers terms, if you see OEMs overall, we are talking about the overall increase in all the segments put together has gone up, because there is a significant increase in the truck and tires with OEMs and also in the two-wheeler and three-wheeler. If you compare the OEM numbers in terms of rupees crores, this is 2% approximately. This is almost flat, but this may be on account of these two-wheeler and three-wheeler and the tractor. There has been some increase.
Overall, OEM volume is more or less flat-ish, we can say, or there is a revenue decline is coming [crosstalk]?
When you compare the overall volumes you are talking about, then it is not comparable, no. In some segments, it may have gone down. In some segments, it may have gone up. That is why I'm saying, s egment-wise, we'll have to see.
Revenue-wise, for your calculations, sir, what is the growth, if I take only revenue?
No. In terms of the overall volume, we have grown Y-on-Y 43% on volume in the OEM.
It's coming 11% decline as per the presentation [crosstalk].
Just do one thing. You do only exclusion of the two-wheeler and three-wheeler segment, and two-wheeler and three-wheeler. With two-wheeler and three-wheeler, if you see, then OEM is almost like 43% increase.
Okay. Understood, sir.
If it is the volume of two-wheeler and three-wheeler, it's not taken into account because there is a very significant increase in two-wheeler and three-wheeler. OE has increased in volume by almost about 4 %- 5%.
Okay. Sir, second question on the Tornel side, there is a decent Y-on-Y growth. Even if we adjust for the currency, there is some growth on the revenue side. Margin improvement on a Y-on-Y basis, it's a contraction. Is there anything to do with the raw material or are we having previous quarters' high-value inventory of the commodities, or anything on the other expense side margin?
I think, Mitul, there is a very small variation between the two quarters on Y-on-Y basis. That is because of, I would tell you, this is the big trading component difference. Last year, the trading was slightly lower, and slightly, it is more in this quarter, right? Although the margins are not very different. This is between 7%- 8% range only, but last year and this year.
Sure. Last question on the India operations side. In FY 2024, we really gained market share and outperformed strongly to the peers. Since the last five to six quarters, if I take the India operations revenue growth, it seems to be underperformance versus industry as well as peer group. Any market share loss one should think of, or is it a product mix- related challenge, or anything else? What is the strategy to rectify that going forward? This is the last question, sir.
No, I don't think there is anything like that. We have said that 15% volume growth in the domestic market is already there. Where is the question of any contraction in terms of the volume?
If I take the revenue growth of India operations, which you have mentioned in all the results, that is coming much lower than the [crosstalk] reporting for the India domestic business. Is it like a commercial vehicle not doing great, and we are stronger on the commercial vehicle side? That is like a product mix impact or market share? T hat is the question?
Mainly because of the PCR, as you are aware, the selling prices are linked to the increase or decrease in the raw material prices. That adjustment might have reduced the slight number on account of the value.
Understood, sir. [crosstalk].
[crosstalk] on net revenue in the operation, it has grown by 10%.
Yeah, or it is slightly lower than the peers in earlier quarters. That was a question basically. I understood the point.
[crosstalk] comparison, I don't think we will be able to compare. Two, three-wheeler prices might have gone up or some other segment prices [crosstalk] .
Yeah, this product mix might be the [crosstalk].
Product mix. Now, product mix difference would be there. It is not so strict. Comparison, we are not actually seeing the comparison with other companies. In any case, it's only one or two companies which are declared in this [crosstalk].
Adding to Sanjeev [Aggarwal], I must mention that OEM in the CV, it is right now only picked up in this quarter two where we are very strong. This previous or corresponding quarters, they were not as bullish in terms of their production.
Yeah, right. That is, I think, right analysis or understanding, that because of the commercial vehicle, which might have a slight impact on overall industry, and that has affected. Great, sir. All the best.
Thank you.
Thank you.
Thank you. The next question is from the line of Maitri Shah from Sapphire Capital. Please go ahead.
Yeah, hello. I'm audible.
Yes.
Hello. Yeah. Firstly, congratulations on the INR 400 crore top line. My question is on the revenue. W hat sort of guidance do you have for the second half of this year and also for the next financial year on the revenue?
As I was addressing the other investors, that we see a good trajectory of demand our way. We are very confident that we will be able to do a double-digit 10% growth on the revenue going forward.
That is great to hear. Secondly, you previously mentioned on the three CapEx projects we were working on. Could you please mention them again with the amount of CapEx that we are investing in them?
Yeah, sure. A total of INR 1,400 crores layout of our expansion. TBR, which is the truck radial tyre, which we are expanding in Luxor CIL with INR 261 crores. All-steel light truck radial, which we are expanding in Mysore, with INR 112 crores. Passenger expansion, which is of INR 1,025 crores, which is happening in our Banmore. We should see these starting production from end quarter three, FY 2026 and ramping up to next year.
That is great. This does not include the $27 million for the Mexico CapEx that we're doing on [crosstalk], correct?
No, that is separate.
[crosstalk]
Yeah, that is separate.
That is separate, o kay. That is going online from the fourth quarter or the first quarter of next year?
Yes, that is right.
Yeah. That is it from my side. Thank you, Anshuman.
Thank you.
Thank you. The next question is from the line of Nandan Pradhan from Emkay Global . Please go ahead.
Hello. Good evening, am I audible?
Yes, good evening.
Yeah. Good evening, sir, and congratulations on a pretty good set of numbers for this quarter. Just a small question from my side. [crosstalk] in Q1 , we expected the tire industry to grow by about 7% or 8% for the full year already. We've already sustained our own guidance of double-digit revenue growth [crosstalk], b ecause of the recent GST cut and the festive surge that is going on, do you see any uptick in the guidance, or would you sustain the same as the last quarter? That's it from my side.
No, very much so. We would stick to our numbers in terms of our guidance of this 10%. We are seeing a good surge coming in. I'm sure this momentum will carry on, but we will stick to the numbers which we have set.
In the previous [crosstalk] .
Hello?
Yes, sir. Thank you so much. No, that answers my question. Thank you.
Thank you. The next question is from the line of S.B. Bayer, as an individual investor.
Hi, sir.
[crosstalk]
[crosstalk] a nice set of numbers. I've got only one question. With such a robust demand scenario which you have painted, how prepared you are from supply side to the time actually your new subsidiary comes in?
Here, we are talking of capacity, as I said in the previous respond. Here, our capacities are coming in in different time lags, PCR and TBR. These capacities together will inch our capacities to 14 %- 15%, and then we will be able to cater to our increased demand.
As I understand, your new capacities are coming in only in the last quarter of this financial year or first quarter of next financial year. Until that time, do you think you will be able to meet with the demand and the surge in the demand?
[crosstalk] as we had mentioned earlier, the capacities for PCR, TBR, and all-steel light truck radial tires are coming in India in the third quarter. In fact, the PCR capacity has already started in the month of October, but the ramp-up will happen by March for all the products. We are fully geared up to take up any requirement, any surge in demand, and we are ready. We will be able to supply. We will not let any loss of sales on account of the capacities' shortage. This definitely will get addressed. As far as the Tornel is concerned, we will be ready by the fourth quarter of this financial year. In between also, when we start, we start with smaller capacities, and then of course, full ramp-up happens over a period of three to six months, depending upon the product.
Plus, capacity utilization is increasing.
Yeah. The capacity utilization is also possible in Tornel, because we are already operating at about 80% - 85% capacity.
88 .
88%. There is a scope to cater to [crosstalk].
Great, sir. You are not seeing a capacity as we can see, to meet with the increased demand?
Absolutely.
Okay. T hank you, sir.
Thank you.
Thank you.
Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Yeah, so t hank you. Thank you so much for joining this call, as usual. We are quite happy to have shared all the numbers, and all the questions that have been fully addressed. Thank you very much for this. I look forward to the next quarter. Thank you so much.
On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.